Common Stock
Company Discusses New Customer and Business Initiatives as Part of 5-Year
Strategic Plan
* Adjusted earnings per diluted common share reach a record $0.87 for the
fourth quarter 2004. Adjusted earnings for the fiscal year 2004,
excluding first quarter compensation and securities redemption charges,
were $3.47 per diluted common share.
* Fourth quarter financing activity totals $610.1 million in 10 separate
transactions. 2004 origination volume increases to a record $2.8
billion in 53 total financing commitments.
* iStar Financial announces a definitive agreement to acquire a
substantial minority interest in Oak Hill Advisors, a premier corporate
credit platform that has a long-standing strategic relationship with
Robert M. Bass and other Oak Hill partnerships.
* Company takes a leading role in financing the acquisition of leading
CMBS investment platform by Blackacre Advisors / Cerberus Capital
Management.
* Pending acquisition of Falcon Financial extends Company's AutoStar
platform targeting the $50 billion auto dealership real estate
industry.
* Investment in strategic initiatives and cautious outlook in core
markets reduces 2005 adjusted earnings expectation by 6%.

NEW YORK, Feb. 15 /PRNewswire-FirstCall/ -- iStar Financial Inc.
(NYSE: SFI), the leading publicly traded finance company focused on the
commercial real estate industry, today reported fourth quarter and fiscal year
2004 results. The Company also outlined its new customer and business
initiatives and provided an update on its 2005 business and financial
expectations.

Fourth Quarter 2004 Results

iStar reported adjusted earnings for the quarter ended December 31, 2004
of $0.87 per diluted common share, up from $0.85 per diluted common share for
the quarter ended December 31, 2003. Adjusted earnings allocable to common
shareholders for the fourth quarter 2004 were $98.4 million on a diluted
basis, compared to $91.2 million for the fourth quarter 2003. Adjusted
earnings represents net income computed in accordance with GAAP, adjusted for
preferred dividends, depreciation, amortization and gain (loss) from
discontinued operations.

Net income allocable to common shareholders for the fourth quarter was
$115.0 million, or $1.02 per diluted common share, compared with $68.8
million, or $0.64 per diluted common share, in the fourth quarter of 2003. Net
income from the fourth quarter includes a $41.2 million gain from the sale of
non-core corporate tenant lease assets. Please see the financial tables that
follow the text of this press release for a detailed reconciliation of
adjusted earnings to GAAP net income.

Net investment income for the quarter increased to $91.5 million, up 9.0%
from $84.0 million for the fourth quarter of 2003. Net investment income
represents interest income, operating lease income and equity in earnings from
joint ventures and unconsolidated subsidiaries, less interest expense and
operating costs for corporate tenant lease assets and loss on early
extinguishment of debt, in each case as computed in accordance with GAAP.

iStar Financial announced that during the fourth quarter, it closed 10 new
financing commitments for a total of $610.1 million, of which $392.2 million
was funded during the quarter. In addition, the Company funded $116.9 million
under 15 pre-existing commitments and received $359.6 million in principal
repayments. Of the Company's fourth quarter financing commitments, 95.9%
represented first mortgage and corporate tenant lease transactions. The
Company's recent transactions continue to reflect its core business strategy
of originating custom-tailored financing transactions for leading corporations
and private owners of high-quality commercial real estate assets across the
United States.

For the quarter ended December 31, 2004, iStar Financial generated returns
on average book assets and average common book equity of 6.1% and 20.3%,
respectively. For the quarter, as determined in accordance with GAAP, the
Company's debt to book equity plus accumulated depreciation and loan loss
reserves was 1.7x.

As of December 31, 2004, the Company's loan portfolio consisted of 69%
floating rate and 31% fixed rate loans. The weighted average GAAP LIBOR margin
was 5.08%. The weighted average GAAP margin of the Company's fixed rate loans
was 7.39% on a term-adjusted basis.

Fiscal Year 2004 Results

Adjusted earnings allocable to common shareholders for the year ended
December 31, 2004 excluding first quarter compensation and securities
redemption charges, were $390.2 million on a diluted basis, or $3.47 per
diluted share, compared to $338.5 million, or $3.25 per diluted share for the
year ended December 31, 2003. Adjusted earnings allocable to common
shareholders for the year ended December 31, 2004, including first quarter
compensation and securities redemption charges, were $266.7 million on a
diluted basis, or $2.37 per diluted share.

Net income allocable to common shareholders for the year ended December
31, 2004 was $205.8 million, or $1.83 per diluted share, compared to $253.2
million, or $2.43 per diluted share for the year ended December 31, 2003.

Net investment income and total revenue increased to $376.6 million and
$694.4 million, respectively, for the year ended December 31, 2004, from
$328.3 million and $573.1 million, respectively, for the year ended December
31, 2003.

Jay Sugarman, iStar Financial's chairman and chief executive officer,
stated, "2004 was an important year for iStar Financial in many respects. We
posted very solid investment results in a highly competitive environment. We
entered a new era in the Company's evolution by becoming an investment grade
company. We hired a number of new people who will assist the Company in
meeting its growth and strategic objectives, and perhaps most importantly, we
maintained our highly disciplined approach to investing shareholder's
capital." Mr. Sugarman continued, "As we look forward, we will continue to
expand and leverage our core competencies in ways that will position us to
grow and compete in the coming years."

Strategy and New Customer Business Initiatives

Mr. Sugarman commented, "In our first five years as a public company, we
built a solid foundation in all of the key disciplines -- including
investments, asset management, finance and capital markets -- that has enabled
us to successfully grow our franchise. Our strategy from the beginning has
been to capture what we believed were significant opportunities in the
underserved segments of the commercial real estate financing markets and to
deliver sustainable, risk-adjusted returns to our shareholders. During the
past five years, we have grown our asset base by over 89% to $7.2 billion at
the end of 2004, while maintaining one of the best credit track records in the
industry. In addition, we have grown our revenues by 164%, increased our
equity market capitalization 209%, posted cumulative total returns of
approximately 308%, consistently targeted returns on equity between 15% and
20% and including the increase in our dividend announced today, we have
consistently met our objective of increasing our annual dividend on our common
stock by 5% on average. We believe our track record of delivering solid
results has demonstrated that our strategies have been sound."

Mr. Sugarman continued, "We are now working on what we believe is a
natural evolution of our business. We intend to build upon our proven
strengths in real estate underwriting, corporate credit underwriting and
capital markets pricing to effectively expand our business by playing a larger
role in the crossover markets of real estate, corporate credit and capital
markets. We believe this strategy will uniquely position iStar for the market
dynamics we project for the balance of the decade."

The Company announced today that it has signed a definitive agreement to
make a substantial minority investment in New York-based Oak Hill Advisors in
a privately negotiated transaction. Oak Hill Advisors is a premier asset
management firm that focuses on corporate credit-oriented investment
strategies for institutional investors. Oak Hill Advisors has a 49-person
team, manages approximately $5 billion of investment capital and has invested
in excess of $25 billion in more than 400 corporate credits during its 14-year
history. The Company expects to close its investment in Oak Hill in the first
half of 2005.

"We believe that strategic business relationships and investments are part
of the natural evolution of our business going forward," said Mr. Sugarman.
"Oak Hill Advisors has a diversified product line which spans all parts of the
corporate credit spectrum, a deep and experienced management team and a long
track record of delivering attractive returns. We are excited to have found a
partner that has a culture and disciplined investment philosophy so similar to
our own. We are also attracted to Oak Hill Advisors' long-term investor
relationships, including their strategic relationship with Robert M. Bass and
Oak Hill Capital Partners. Our investment in Oak Hill Advisors will provide
iStar with a stable, long-term asset management fee income stream; but more
importantly, from a strategic perspective, Oak Hill will provide us with
additional knowledge and expertise to capitalize on the significant
opportunities at the intersection of the corporate and real estate capital
markets."

Acquisition of Falcon Financial

On January 20, 2005, iStar Financial announced that it had entered into a
definitive agreement to acquire Falcon Financial Investment Trust, an
independent finance company dedicated to providing long-term capital to
automotive dealers nationwide. Under the terms of the agreement, iStar
Financial commenced a cash tender offer on January 31, 2005 to acquire all of
Falcon Financial's outstanding shares at a price of $7.50 per share, for an
aggregate equity purchase price of approximately $120 million. The company
said it expects to close the acquisition in the first half of 2005 upon
successful completion of the tender offer.

Mr. Sugarman commented, "Falcon Financial expands our current investment
activities in AutoStar, which is the first of what we expect to be a series of
"iStar-branded" platforms that deliver iStar's highly customized, on-balance
sheet approach to financing underserved and real estate-intensive businesses.
Between Falcon and AutoStar we will have a $1 billion commitment to an
industry-leading platform providing advisory services, sale/leaseback capital
and a wide variety of financing solutions to the $50 billion auto dealership
real estate market."

The Company also announced today that it recently made a strategic
investment in the acquisition and subsequent privatization of LNR Property
Corporation by Blackacre / Cerberus Capital Management, L.P. and senior
executives of LNR Property Corporation. LNR is a diversified company that owns
a portfolio of operating real estate assets, development properties and real
estate securities, and is the largest special servicer in the CMBS market.

"Our long-standing relationship with both LNR and Blackacre / Cerberus
created an opportunity for iStar to make a significant investment throughout
the capital structure in the new private company. LNR has historically focused
its investing activities in areas where the real estate and capital markets
intersect. We are very familiar with LNR's business model and look forward to
working with Blackacre / Cerberus going forward to expand our business
relationship and capitalize on the variety of strengths that each of our
organizations brings to the investing arena," Mr. Sugarman said.

Capital Markets Summary

In December, the Company successfully upsized its unsecured credit
facility to $1.25 billion from $850 million and amended the accordion feature
that allows the Company to increase the facility to $1.5 billion in the future
if necessary.

Catherine D. Rice, iStar Financial's chief financial officer, stated,
"This increase in our unsecured funding capacity will assist us in continuing
our shift to unsecured debt by allowing us to reduce our more expensive
secured credit line capacity. We are pleased that nine new participants joined
our existing 19-member bank group to complete the upsize of the facility."

Earnings Guidance

Consistent with the Securities and Exchange Commission's Regulation FD and
Regulation G, iStar Financial comments on earnings expectations within the
context of its regular earnings press releases.

For fiscal year 2005, the Company expects diluted adjusted earnings per
share of $3.25 - $3.50, a 6% reduction from the Company's prior guidance, and
diluted earnings per share of $2.25 - $2.60, based on expected net asset
growth of $3 billion in 2005. For the first quarter 2005, the Company expects
diluted adjusted earnings per share of $0.73 - $0.76 and diluted earnings per
share of $0.49 - $0.53.

Ms. Rice stated, "As we discussed last quarter, we are continuing to see
higher levels of loan prepayments as capital inflows into the commercial real
estate sector remain strong. The timing of prepayments is difficult to
forecast, however we now anticipate receiving some of the prepayments we
forecasted to receive in the fourth quarter of last year during the first and
second quarters of 2005. In addition, increased capital in the real estate
sector has reduced credit spreads across all parts of the capital structure.
These factors, coupled with our previously announced asset sales, which
totaled $189 million in the fourth quarter of last year, will decrease our
adjusted earnings for the first half of 2005. In addition, the capital
investment in our new customer and business initiatives outlined today will
create some near-term earnings dilution. Our net asset growth outlook for 2005
remains in the $3 billion range, however a portion of our investment volume
will come from investments in our new initiatives - some of which will not
generate immediately accretive earnings. We have lowered our 2005 adjusted
earnings per share guidance by approximately 6% to take these factors into
account. We are willing to accept short term dilution from strategic
investments in order to expand and enhance our competitive position going
forward."

Risk Management

At December 31, 2004, first mortgages, participations in first mortgages,
corporate tenant leases and corporate financing transactions collectively
comprised 92.5% of the Company's asset base. The weighted average first and
last dollar loan-to-value ratio for all structured finance assets (senior and
junior loans) was 21.4% and 67.5%, respectively. As of December 31, 2004 the
weighted average debt service coverage for all structured finance assets,
based on either actual cash flow or trailing 12-month cash flow through
September 30, 2004, was 2.19x.

At quarter end, the Company's corporate tenant lease assets were 94.9%
leased with a weighted average remaining lease term of 11.2 years. At quarter
end, 78.5% of the Company's corporate lease customers were public companies
(or subsidiaries of public companies).

At December 31, 2004, the weighted average risk ratings of the Company's
structured finance assets was 2.72 for risk of principal loss, compared to
last quarter's rating of 2.68, and 3.19 for performance compared to original
underwriting, compared to last quarter's rating of 3.17. The weighted average
risk rating for corporate tenant lease assets was 2.40 at the end of the
fourth quarter, an improvement from the prior quarter's rating of 2.47.

At quarter end, accumulated loan loss reserves and other asset-specific
credit protection represented an aggregate of approximately 6.9% of the gross
book value of the Company's loans. In addition, cash deposits, letters of
credit, allowances for doubtful accounts and accumulated depreciation relating
to corporate tenant lease assets represented 10.3% of the gross book value of
the Company's corporate tenant lease assets at quarter end.

At December 31, 2004, the Company's non-performing loan assets (NPLs)
represented 0.38% of total assets. NPLs represent loans on non-accrual status
and repossessed real estate collateral. At December 31, 2004 the Company had
two loans on non-accrual and no repossessed assets. In addition, watch list
assets represented 0.89% of total assets at December 31, 2004.

Timothy J. O'Connor, iStar Financial's chief operating officer, stated,
"The credit quality of our portfolio remains strong and we are seeing
improving real estate fundamentals in many real estate markets across the
country. This quarter we completed the previously announced sale of certain
non-core corporate tenant lease assets totaling $189 million. While the sales
represent only a small percentage of our CTL portfolio, we were pleased to be
able to take advantage of the buoyant sales environment to reduce our exposure
to certain real estate markets."

Dividend and Other Developments

On December 1, 2004, iStar Financial declared a regular quarterly cash
dividend of $0.6975 per common share for the quarter ended December 31, 2004.

iStar Financial announced today that, effective April 1, 2005, its Board
of Directors approved an increase in the regular quarterly cash dividend on
its common stock to $0.7325 per share for the quarter ended March 31, 2005,
representing $2.93 per share on an annualized basis. The $0.7325 quarterly
dividend represents a 5.0% increase over iStar Financial's pre-existing
quarterly dividend rate of $0.6975. The $0.7325 quarterly dividend is payable
on April 29, 2005 to holders of record on April 15, 2005.

[Financial Tables to Follow]

iStar Financial is the leading publicly traded finance company focused on
the commercial real estate industry. The Company provides custom-tailored
financing to high-end private and corporate owners of real estate nationwide,
including senior and junior mortgage debt, senior and mezzanine corporate
capital, and corporate net lease financing. The Company, which is taxed as a
real estate investment trust, seeks to deliver a strong dividend and superior
risk-adjusted returns on equity to shareholders by providing the highest
quality financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00
a.m. ET today, February 15, 2005. This conference call will be broadcast live
over the Internet and can be accessed by all interested parties through iStar
Financial's website, http://www.istarfinancial.com, under the "investor
relations" section. To listen to the live call, please go to the website's
"investor relations" section at least 15 minutes prior to the start of the
call to register, download and install any necessary audio software. For those
who are not available to listen to the live broadcast, a replay will be
available shortly after the call on the iStar Financial website.

(Note: Statements in this press release which are not historical fact may
be deemed forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Although iStar Financial Inc. believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, the Company
can give no assurance that its expectations will be attained. Factors that
could cause actual results to differ materially from iStar Financial Inc.'s
expectations include completion of pending investments, continued ability to
originate new investments, the mix of originations between structured finance
and corporate tenant lease assets, repayment levels, the availability and cost
of capital for future investments, competition within the finance and real
estate industries, economic conditions, loss experience and other risks
detailed from time to time in iStar Financial Inc.'s SEC reports.)